Friends are fine, but can we really help a stranger?

We jump to help a friend, even before we hear him or her say ‘help’! But a stranger?

I’ve discovered something called Rang De. Called social investment, it lets me lend Rs.100 to a needy stranger. And lo and behold, the stranger returns my Rs.100, with interest, within the next 12 months!

Rang De is an NGO. It helps poorest of the poor to stand on their feet, with a little help from people like you and me.

How?

Rang De has two buckets:

In one bucket sit hundreds of poor folks (let’s call them promising, small but poor entrepreneurs or PROSPERS) who need around Rs.5,000 to build their small ventures. Buy a cow, set up a kirana shop, buy a sewing machine, etc. You’ll be surprised to learn how small their needs are. And how far this little amount Rs.5,000/- is a life changer for them.

In the second bucket sit social investors or SIRS – people who wish to lend small sums of money to PROSPERS. The money that SIRS lend also earns them a small interest – 2%. But such is the commitment, that to date, 98.7% has been returned to SIRS.

To explain in simple terms, Rang De manages the people sitting in these two buckets, using a completely transparent, online process to help the SIRS reach out to PROSPERS and help change their life. It’s perhaps one of the best uses of technology you may see!

Several questions came to my mind when Rang De’s two founders, Smita and Ram, explained their mission to me. But, to keep it simple, I’ll just mention the first two:

Where do they find the PROSPERS to fill Bucket 1? And how do they manage PROSPERS – reach them the money, collect back the installments, etc.?

What’s in it for Rang De?

Their answers:

Rang De has tied with several NGOs and self help groups at village level. These associate partners identify the PROSPERS, then get them to form a group that commits to repayment of loans on each other’s behalf (this is the famous Grameen Bank model that Nobel Prize Winner Dr Yunus created).

The details of each PROSPER, along with their respective pictures, enterprises, etc. are then posted onto Rang De’s website, where SIRS can see them, and choose the PROPSER they wish to lend their money to.

Money too is dispersed through these associates (NGOs). They also collect it back and deposit it into Rang De’s bank account. Absolutely no coercive measures are used to collect! It’s a group model, where all the group members commit to stand for each other – contributing between them for those who face any difficulty in paying the monthly installment.

All loans are repayable within 12 months. 95% of the loans are for a maximum of Rs.5,000. Rang De doesn’t lend more than Rs.25,000. Rate of interest paid by borrower is 8%. The interest is spilt into three:

Rang De associates (the NGOs) who manage the PROSPERS, keep 5%. This helps them cover their costs.

SIRs or Social Investors (i.e. you and I) gets 2%.

Rang De retains the balance 1%. This money is used for two purposes:

To cover the shortfalls in repayment, wherever and whenever these occur.

To meet Rang De’s operational costs.

Aside:

Having been an entrepreneur for 10 years now, I find it impossible to believe that Rang De is able to contain its operational expense to no more than 1% of what they receive by way of social investment. “Remember, we use cutting edge, web-based technology. This helps us keep our cost to almost nothing,” beams Ram, Rang De’s co-founder.

Answer to second question: What’s in it for Rang De?

Rang De's co-founders: Smita and Ram (left)

“Rang De is able to go out and make a difference to someone’s life,” speak the two founders almost in unison, “is all we seek.”

Achievement of this simple, but extremely arduous mission is what keeps its two founders happy. The two founders, by the way, gave up their respective careers to pursue Rang De.

Ram (Ramakrishna N K) is an engineer. He spent 7 years in three different companies, starting his career at Satyam Computers. He worked with Vignette Europe Limited before starting Rang De. He worked with IFMR Trust for a year after starting Rang De and joined Rang De full time in April 2009.

Smita obtained her education from School of Social Work and then spent a little less than 3 years with Oxfordshire County Council before co-founding Rang De.

Rang De is supported by several companies who provide them with grants to fund certain sectors. These are ICICI Ventures, Spark Capital, Zoho, Muthoot, among others.

Rang De also has some extremely committed and well-known members of community head their board.

How much money does it to take for someone to be social investor with Rang De?

As little as Rs.100? Yes, just Rs.100.

I personally learnt about Rang De from a newspaper column last year. I visited their website, made a social investment, and then contacted Smita and Ram. I’m most impressed by the two founders. I find their enthusiasm and commitment both inspiring and infectious – every time I meet them, I think I’m not being as responsible as I should, or perhaps can be?

I’m keen you too become Rang De’s Social Investor, a PROSPER. I believe you will find it satisfying – knowing where your money is going and whom is it helping is really fulfilling.

I’d like to make a small, token investment of Rs.100 on your behalf. So that I can get you started on making social investments with Rang De. I’ll be grateful if you can say ‘yes’ as your comment, or by just sending me a blank email to rajbhatia.blog@gmail.com.